tv [untitled] CSPAN April 6, 2010 12:00pm-12:30pm EDT
and then behind you next. >> alex pollak of aei. thanks very much for a very interesting lecture. the part which struck me as the best is the part where you talked about the need to have the opening from the bottom of new enterprises, new competitors. always rising. which is the most important -- >> the 65 -- >> and the new -- the new forums changing the old ones. >> right. >> could you say more about what we ought to be doing to make sure that america, which i do think is rather -- is quite unusual and special in its openness to the bottom that way -- what should we be doing to make sure we really maintain
that advantage and that nature of society? >> what i would do? >> yeah. >> any new business would be exempt from all recommendations for two years. and all taxes. you want to start a business, put a key in the door and open it up. i would start with that. are there problems with that, sure. like the guy for all this know where he gets his money from acorn, i don't know. but you have to take some chances. but i would tip public policy to remove impediments. i wouldn't give subsidies because i don't think the government knows who to subsidize. but i would remove impediments of the establishment of new businesses. that's all i can think of. of course, i would stop doing stupid things like this healthcare business like it would make it expensive for new businesses. remember one thing about regulation. big companies love regulation. they can cope with regulation. they have big law departments. they hire consultants up the gazoo. so that when the epa has a new
regulation, if you're exxon you love it because some small refiner can't cope with it. i don't want to sound like a ranting populist. but the fact of the matter is you have to be very careful -- regulations favor incumbents. also the reason -- remember, new businesses are financed by venture capitalists. the first question of venture capitalist is when you go with an idea, let's say it's in the software business, what will microsoft do? now, the answer is well, it's going to cut its price on any product that's like mine down to zero, the venture capitalist knows what to do. he goes home. and he says, call your family for financing. so i think we have to stop predatory acts by incumbents. and i think it wouldn't bother me if we had a particularly rigorous standard somehow related to market share. but that's a whole other story. michael? >> michael barone with aei and the washington examiner. i'm not sure if peter wallaceson
is here -- >> i wish he were. >> his absence -- i wanted to bring up the fannie -- your thing to resuscitate fannie and freddie. >> wait, wait, wait. >> if the mortgage securitization business is an economically viable one, why will not firms engage in that with appropriate regulations? as you mentioned, as they do as i understand in other things like credit card securitization and so forth? >> well, i think they would. what i was arguing for, michael is not the resuscitation of fannie and freddie. what i was arguing for was whatever system we come up with, give weight to the important externality -- the positive externalities that are associated with homeownership which is not part of the mortgages and securitized mortgages so that when a guy is buying a house, the value of reduced crime rates is not reflected fully in the value of the house.
now, if i'm wrong, the hell with it. then we should just leave it to private markets. i would try to get the politician out of it. because the politicians have a costless incentives to make houses available. so i prefer the markets. but i would have the markets with some form of subization that doesn't go as crazy as fannie and freddie. go ahead. >> this -- >> i can't hear. >> isn't the mortgage deduction on first houses arguably something in the nature of what you're talking about? >> they might be and i don't know the magnitudes. that's the problem. they could be. and if that solves it, fine. although i would be inclined not to relate it so much to the advantage of it to the income level of the recipient. i would cap it somewhere so that we would -- it's not just a gift to anybody who would buy the house anyhow. it's a very -- all i was trying -- and please understand
this and i was hoping peter was here because he's the coherent pinata hitter in this business. i was trying to make the point that conservatives cannot content themselves with saying fannie and freddie are evil. i don't like -- look, i'm not for imposing the moral standards of charlie rangel on the housing market. what i want to do is incorporate in it the positive externalities associated with -- i always thought conservatives were for home homeownership. economists were against it because it makes the labor market less flexible. if you have a house and you're out of work, you're a lot worse off than if you're renting an apartment than you're out of work 'cause you can go where the work is. all i'm trying to say it's a very complicated business. and just taking the same position that conservatives have been taking, you know -- if you
want a half page of the "wall street journal" attack fannie and freddie, i don't think that makes much sense. charles? >> charles, aei -- >> you can come in front. you're better looking than i am. >> i agreed almost everything strategically maybe not tactically in all cases. but you talked about shame that you used to have. that governed behavior. and when adam smith was writing appropriateness in -- well, there's an argument to be made that's changed a lot in the united states. >> oh, yeah. and you have been around ceos and senior executives for a fair number of years now. >> thank you. [laughter] >> i'd just like you to reflect -- have you observed -- have you observed changes in the sense of seemliness. a sense of yes i could do this legally but i'm not going to do it for other reasons. have you seen changes in that over that? and if so, why? >> that's a very tough question.
because i don't work with or for a random sample. as you can tell, my views are not sort of mainstream corporate. so that i don't work with a random sample of american corporations. one corporation i work with i was at a meeting in which accountants came with a perfectly credible way in which this minority shareholder could screw the majority shareholders. and he said it's just wrong. i don't want to do it. it's wrong. but it's legal. he said it's wrong. i won't do it. so there are instances of that. but what i found is that there is a -- there was an upward spiral of self-reinforcement. self -- how would you say it proof that they were sort of -- they really deserved all of this stuff. and the attacks, for instance,
on shareholder groups that oppose them as being -- you remember the phrases, sharks, predators. these were people who owned shares. they wanted to get heard. maybe it's slightly worse in the compensation area than it was before. i can't go as far as -- i have to be really careful. i mean, i can't go as far as saying that's enough! that's -- you ought to be ashamed of $100 million. i would like a system where if you earned it, and you test that separate question, i wouldn't be embarrassed by $100 million. i wouldn't. i wouldn't rely -- i would rather get the process right, my first choice, of setting these rules and incentives. preferably incentives. relying on shame, again, the
government has a role to play. in creating and indicating what is shameful. and i think obama has done, you know -- he's gone a little overboard. they tell me at the -- >> we're going to leave this recorded event now take you live as promised to a discussion on the upcoming nuclear security summit in washington. more than 40 world leaders will be meeting april 12th to discuss strategies for keeping nuclear weapons out of the hands of terrorists. this event hosted by the fissile materials working group, a coalition of organizations working with the administration on its antiproliferation agenda. live coverage now. >> security issues and the nuclear security summit which is coming up very quickly next week. since the terrorist attacks of 9/11 there have been a sea change of thinking in nuclear weapons. security experts led by cold warriors such as henry kissinger and george schultz have recognized that the threat of unchecked proliferation and the possibility that a terrorist
organization could buy, steal, or build a nuclear device is the number one threat to our homeland and to those of our allies. the twin threats of nuclear terrorism and nuclear proliferation represent the most serious challenge of security to the globe. that's why there's a growing bipartisan consensus among military and national security experts who are promoting a new nuclear security agenda aimed at reducing and eventually eliminating this threat. this consensus is being woven into every aspect of the obama administration's nuclear security agenda as well. it's the rationale behind next week's nuclear security summit here in washington, d.c. it's the rationale behind the fundamental shift we see in this morning's nuclear posture review which elevates nuclear terrorism to the top of the agenda for the first time ever. so why is this such a compelling issue for policymakers. because the continuing stockpile of nuclear weapons materials is large enough to build 120,000
nuclear bombs. because osama bin laden considered it his religious duty to obtain nuclear weapons. and to use them against the united states and our allies. and because nuclear terrorism, though, it's the greatest threat to our homeland is also the most preventible. with that i'd like to introduce to you our distinguished panelists today. and i'll keep their introductions fairly brief as you have their full bios in your packets. matthew bunn here on my left is a professor at harvard. and he's written over 20 books including the famous "securing the bomb" and matt will address the danger of vulnerable nuclear materials. and the importance of this threat today. elizabeth turpen will then speak. she is currently an associate at booze allen hamilton. she's worked also many years in the think tank community at the simpson center and also on the hill for center pete dominici. she's going to address what the u.s. and multilateral institutions are doing today to stem the threat of nuclear terrorism.
finally we have kenneth luongo, he's the president of the partnership for global security. and my cochair on the physicalil material working group. and kenneth will talk about what and he can't expect from the summit and where do we go from here. ken has a long background working on these issues as well both at the government of department of energy and also on the hill. >> thanks, alex. so as alex said, nuclear terrorism genuinely is a real and urgent threat today. and i want to make several points to support that conclusion. first some terrorists genuinely are seeking nuclear weapons and the materials needed to make them. there have been repeated al-qaeda attempts to get either stolen nuclear materials or to recruit nuclear expertise. they had a nuclear weapons effort that reported directly to zawahiri when they were in afghanistan that progressed as
far as caring out tests of the conventional explosives for their bomb in the desert in afghanistan. in 2003, they were negotiating to buy what they believed were three nuclear devices. and the al-qaeda leadership sent a message saying, go ahead and make the purchase if the pakistani expert with his equipment confirms that they're real. and the united states has never managed to identify who this pakistani expert is that apparently is working with al-qaeda. and that they have confidence would be able to determine whether a nuclear weapon was real. the japanese terror cult that launched the nerve gas attack in the tokyo subways sought nuclear weapons before. and having two terrorist groups seeking nuclear weapons in the last 15 years, it's unlikely that they will be the last. second, repeated government studies have concluded that it is plausible that a sophisticated terrorist group could make a nuclear bomb if
they got hold of the necessary nuclear material. either plutonium or highly enriched uranium. it doesn't take a manhattan project to make a bomb. getting the nuclear material or making the nuclear material, if you're a state, is by far the hardest part. and is well beyond the plausible capabilities of terrorist groups. in particular, with highly enriched uranium you can make what's called a gun type bomb. the simplest type of nuclear bomb. which is basically slamming two highly eprich uranium together at high-speed. the bomb that obliterated hiroshima was a canna. -- canon. there's not that much more to it than that. this material, unfortunately, is easy to smuggle. and hard to detect. the nuclear material needed for a nuclear bomb would fit easily in a suitcase. hence, insecured nuclear material anywhere is really a threat to everyone everywhere.
so where are the biggest risks? that nuclear material might be stolen and fall into terrorist hands? this is a global problem. it's not limited to any one country. certainly not just the former soviet union. as alex mentioned, there's enough nuclear material in the world to make a huge number of nuclear weapons. there's about 1,600 tons of highly enriched uranium, some 500 tons of plutonium separated from spent fuel. even a tiny fraction of that getting into the wrong hands could cause a global catastrophe. it exists in dozens of countries. in hundreds of buildings. but not thousands of buildings. not tens of thousands of buildings. so securing these stocks is a big job. and a complicated job. but it's potentially a doable job. and there has been as we'll hear very substantial progress already in recent years. my view is that pretty much all of the countries where these
materials exist including the united states have more to do to make sure they're secure from the kinds of capabilities that terrorists and thieves have shown they can pull together. the most recent incident demonstrating that was the peace activists breaking into a nuclear weapons base in belgium. that being said there are places where the risk is higher. my view is that the biggest risks today are in pakistan, which has a relatively small and relatively heavily guarded stockpile but those security systems facing huge threats both from insiders with sympathies to terrorists and from potentially huge outsider attacks. there was one incident in pakistan where a particular nonnuclear base was attacked by 600 armed jihadis at the same time. russia is another category of high risk. i believe. they have the world's largest stockpiles and the world's largest numbers of buildings and bunkers.
and nuclear security that has improved dramatically since the mid-1990s but still has some significant weakness. and those security systems face some significant threats particularly from insiders with the massive corruption problem that exists in pakistan. as it does highly enriched fueled research reactorses. most of these reactors though not all have not enough for a bomb at one side. al-qaeda showed with the embassy bombings and then with 9/11 it is capable of attacking more than one site at the same time if it is needed to achieve its objectives. and they have very minimal security at most of these places. many of them are on university campuses. and nuclear theft is not a hypothetical worry. it's an ongoing reality. there are 18 cases documented by the international atomic energy agency involving theft or loss of real plutonium or highly enriched uranium.
there are more cases that definitely occur. the relevant person was arrested, confessed, spent time in jail but for whatever reason the relevant state hasn't been willing to confirm it to the iaea. there is, however, good news in this story as well. we don't yet have any hard evidence that any terrorist group has, in fact, gotten either the nuclear materials necessary for a bomb or all of the nuclear expertise necessary to turn it -- those materials into a bomb. and this would be, i think, among the most challenging things, technical activities that a -- any terrorist group has ever succeeded in accomplishing. but we don't really know what the real probability is that terrorists might be able to pull it off. i often use the analogy of a nuclear power plant. no one would in their right mind would operate a nuclear power plant up-wind of a major city if it has a 1 in 100 chance of blowing sky high every year because people would realize that was too big a risk. i think we're probably running
that big of a risk or bigger from the way that we manage nuclear material in the world today. so what's the solution? the solution is a fast-based global effort to secure all nuclear weapons and all nuclear materials that you could use to make a nuclear weapon worldwide. and the objective of the nuclear security summit is to kick off that effort. and move it on to a faster track than the one we have been on. we are not yet today on a track that would lead to success in securing all nuclear stockpiles within four years. but we have an opportunity with the leadership coming out of the nuclear security summit and the follow-up that is critically needed after the nuclear security summit to shift onto the faster track that will lead to success. as our -- my colleagues will say, there's a lot that has been done. there's a lot more to do. the fundamental key is going to be convincing policymakers and
nuclear managers around the world that this is, in fact, a real threat. that there's more action that needs to be taken on nuclear security. overcoming the widespread complacency about this threat that exists in countries all over the world is, i think, the single biggest challenge among many difficult challenges that will have to be overcome if we're going to succeed in securing these stockpiles. >> thanks, matt. we'll hear from libby next. >> you're going to hear a reiteration of a couple of matt's final points here in a moment. i was tasked with offering sort of an overview of ongoing initiatives both multilateral and some u.s.-prompted efforts. but a rough profile of the existing framework suggests the formidable challenge of pivoting, if you will, from a cold war focus to one primarily concerned with terrorist threats and proliferation. having said that, it appears as alex alluded to that the nuclear posture review tries to make
just that pivot. terrorist in rogue states is key elements of our strategy rather than former rising potential adversaries. put simply the internet framework must -- but creating and implementing a nuclear security framework requires first achieving consensus regarding the threat. and then making the resources available to address the agreed-upon objectives. it's fair to say that the u.s. has provided formidable leadership in this domain since the end of the cold war. not just in budgetary means but also in launching various efforts to address the threat. of course, this reality also has a downside. in that the made in the u.s. label doesn't necessarily translate into global buy-in regarding the threat. there's a dual and interconnected challenge of achieving consensus regarding the threat. and then prioritizing the resources necessary to address it. but let me quickly turn to the initiatives and efforts underway.
these are conventions, resolutions, and then u.s. and bilateral in their nature. the convention of note is the protection of nuclear materials as amended in 2005 which contains measures -- requires protection of nuclear materials, facilities and expands measures to prevent and respond to nuclear smuggling. but it will only enter into force when two-thirds of the states have ratified it. and to date only a little over 30 of the 142 parties to the treaty have ratified the treaty. as a footnote to this because it's pertinent to the overarching discussion, this is the most traditional and, therefore, the most legitimate approach to creating that international security framework on nuclear security. but the initial version, not the amended 2000 version, but the earlier iteration took 17 years from its -- from its negotiation to entry into force. and you have to view that sort of timeline in the context of
the rapid pace of emerging threats and 120,000 nuclear weapons worth of materials spread across the globe. just after 9/11, the u.n. security council passed resolution 1373. this was a sweeping mandate to address an array of issues related to counterterrorism. and in the wake of revolutions surrounding the a. q. khan incident the u.n. security council passed resolution 1540. that was in 2004. 1540 represents the second sweeping nonstate-specific u.n. security council mandate. the and required all states to get their wmd houses in arrested as it related to threats, nuclear chemical biological weapons. more recently the obama administration spearheaded u.n. security council resolution 1887. which outlined a broad range of nuclear nonproliferation and security objectives.
including 10 provisions related to mpt obligations as well as several focused on safeguards agreements and strengthening the iaea. and a handful of items related to 1540 and nuclear security-specific objectives. now, i turn to the ones that are u.s. or bilateral in their genesis. the proliferation initiative was started by president bush in 2003. and now includes 90 participating states that endorsed a statement of interdiction principles. in 2006, the u.s. and russia bilaterally launched the global initiative to combat nuclear terrorism. participation in this effort now numbers 76 countries. similar to psi, the participating states have committed to a statement of premi principles on break addiction and information-sharing. the global initiative in the proliferation security initiative represent the counterproliferation version of a coalition of the willing.
if you will. to creating a nuclear security framework. participants join that there are no mandatory baseline standards or hard and fast commitments that have to be made to sign up as a participant. cooperative threat reduction is another item of note. since the collapse of this soviet union, the u.s. has created an array -- an array of programs at the departments of energy, and defense to address loose nukes. while it supposed on the states of the former soviet union particularly russia, these efforts have expanded globally and are now designed to address a variety of nuclear security threats. for example, signature program that matt bunn touched on. it has grown steadily in the past few years as the global threat reduction initiative. focused mainly on retrieving that highly enriched uranium from the research reactors on
academic campuses that matt talked about. the 2010 budget was a bit underwhelming on the white house focus on the problem but 2011 sees a significant increase on the programs focused on vulnerable materials. 26% increase to be more precise. which is pretty admirable in terms of current budgetary circumstances. a multilateral corollary to the global partnership which was initially launched in 2002 now includes 20 countries who are focused on nonproliferation assistance. the global partnership answering questions was focused on russia because the g8 made the decision to expand its geographic focus to 2008. i'll let ken offer some thoughts on the extension and expansion of the efforts as well. so a quick revamp includes the
convention on the protection of fissile materials, 1543, 1540, 1887, psi, global initiative, cooperative threat reduction and the global partnership. it's a dizzies array of efforts. and if you're not confused yet, just wait. now i'm all done with that. but there are three missing ingredients in these efforts. and one pervasive challenge related to these ingredients. one, international standards. whether it's the conventions or the resolutions or statements of principles, the standard is each according to his own assessment of the threat. and their self-enforcement of compliance. getting consensus on standards is the first step towards assessing and compliance. without a baseline you can't judge whose standards are too lax to prevent a diversion of the materials. number two, consensus on the threat. and matt already talked about this. but many countries discount that nuclear terrorism is a real threat.
without raising the profile, including recognition of the global impact of a global detonation here or anywhere else. the summit is a very important step in terms of trying to achieve that consensus. third, priority. a country that doesn't perceive nuclear terrorism as a threat is not going to make higher standards a priority. another missing ingredient that is much longer in discussion is what i would call the governance gap. related to the infrastructure, security culture and requisite capacities to address a highly technical and expensive transnational problem. but transnational problems require collective actions there's no way around it. without international standards, consensus regarding the threat and catapulting nuclear security on the agenda the threat of nuclear terrorism simply cannot be addressed. the summit with over 45